Chinese carmakers have urged China’s government to raise tariffs on imported European gasoline cars in retaliation for Brussels’ restrictions on Chinese electric vehicle exports, the state-run Global Times newspaper reported on Wednesday.

Chinese authorities hinted at retaliation after the European Commission announced it would impose anti-subsidy tariffs of up to 38.1% on imported EVs, Reuters reports.

In a closed-door meeting on June 18, China’s auto industry “called on the government to adopt firm countermeasures (and) proposed to positively consider increasing the temporary duty on gasoline cars with large displacement engines,” according to the report.

The meeting was organized by China’s Ministry of Commerce in Beijing and was attended by SAIC and BYD. European automakers Volkswagen Group, BMW, Mercedes-Benz, Stellantis, Renault and Porsche were also present, reports Automotive News Europe.

The main aim of the meeting was to pressure Europe to review its decision on tariffs on Chinese all-electric cars imported into the EU.

Industry insiders say both Europe and China have reason to want to strike a deal in the coming months to de-escalate tensions and avoid adding billions of dollars in new costs to Chinese EV makers as the EU process allows review.

The European Commission said on June 19 that it was reviewing the situation “with a view to discussing whether a mutually acceptable solution can be found”.

EU trade policy has grown increasingly protectionist amid concerns that China’s growth model could flood the 27-member EU with cheap goods, including electric vehicles, as Chinese companies try to boost overseas sales. due to low domestic demand.

The European Commission’s announcement on June 12 that it would impose anti-subsidy duties of up to 38.1% on imported Chinese EVs from July followed a move by the United States to raise tariffs on Chinese cars in May and opens a new front in trade the West’s war with Beijing.

The Global Times first reported late last month that an automotive research center linked to the Chinese government proposed that China raise import duties on imported gasoline sedans and SUVs with engines larger than 2.5 liters to 25 percent, from the current rate of 15%.

The same newspaper last month also hinted that Chinese companies planned to ask authorities to launch an anti-dumping investigation into European pork products, which China’s commerce ministry said on Monday it would take over. It also urged Beijing to review dairy imports into the EU, Automotive News Europe reports.

Exports of passenger vehicles with engines larger than 2.5 liters from Europe to China totaled 196,000 units in 2023, up 11 percent year-on-year, according to data from the China Passenger Car Association.

In the first four months of 2024, exports of such vehicles from Europe to China amounted to 44,000 units, down 12% from the same period a year ago.

EU car exports to China reached 19.4 billion euros in 2023, while the EU bloc bought 9.7 billion euros of electric vehicles from China, according to data from the EU statistics office.

China accounts for about 30 percent of German automakers’ sales, and Germany is by far the biggest exporter of vehicles with engines of 2.5 liters and above, having shipped $1.2 billion worth of vehicles to China since the start of this year, the Automotive News Europe.

Mercedes-Benz’s GLE-Class large SUVs, S-Class sedans and Porsche’s Cayenne are the three most popular imported cars from Europe to China. They accounted for more than a fifth of the total 155,841 imported European brand cars in the first five months, according to data from China Merchants Bank International.

Slovakia is the fourth largest supplier to China and the second largest supplier of large-engine cars to the EU. This year it exported SUVs worth $803 million.

The US, UK and Japan also export large numbers of cars with engines larger than 2.5 liters and are likely to benefit the most from the proposed tariff increase.